Watching Open Source Destroy Capitalism

Theft, or post-capitalism?

About twenty years ago one of my college housemates, Jerry, had an idea.

“What if you could send music over the internet?”

This was the age of 2400 baud modems that made crazy high pitched noised while they tried to connect to the internet. My 20 megabyte external hard drive for my MacPlus computer had set my parents back about five hundred bucks. High quality digital audio files were about the same size as they are now (about ten megabytes per minute of audio). In other words, I couldn’t even fit a single digital audio track on my expensive hard drive — I worked exclusively in MIDI.

So I forgive myself for my lack of vision at the time. I thought Jerry’s idea was ridiculous, and I let him know. Digital audio files were way too big, bandwidth was way too narrow. It would never happen.

Jerry persisted. What if a music file could be compressed? What if bandwidth increased? He pointed out that it would change everything about the way music was distributed, maybe even the way it was made.

Jerry didn’t go on to invent Napster, but he was absolutely right. Sending digital files over the internet would change everything. It would radically disrupt the music industry. It would also make producing, distributing, publishing, and even promoting music more accessible to the average musician and music producer. For the consumer, it would make music essentially free (illegally at first [early Napster], and now legally [YouTube, Spotify, etc.]). And a computer company would become the biggest music distributor.

Jerry saw it coming early on, but I actually lived through it. I co-founded Loöq Records with Spesh in 1998. For years we made and sold vinyl records and CDs. As soon as we could sell our music in digital download format, we jumped on the opportunity. Good thing, because dance music vinyl sales crashed (everywhere except Germany, but that’s another story). We never made much money selling vinyl, but we had to stop entirely when average sales dropped from the low thousands to the low hundreds.

Selling music digitally turned out to be more profitable, because production costs were so low. Also, we never ran out of inventory. On the down side, sales were much lower. People could easily make copies and share the music. In addition, the number of small independent music labels ballooned massively because the financial risk of putting out music was so low. In our vinyl days we were risking at least two grand on each release, often closer to four. Putting out a digital release costs, well … nothing. So the competition, and choices for the consumer, increased dramatically. As a record label, we had to completely reevaluate the reasons for our existence as a company.

Recently, we’ve seen streaming services (like Spotify and Pandora) and sharing services (like SoundCloud) cut into digital download sales the same way digital downloads cut into vinyl and CD sales. Music is now free, legally, for any reasonably tech-savvy consumer (less costs of internet and/or phone service).

Strangely, Loöq Records is more profitable than ever. Even as sales continue to plummet, other income sources increase or stay steady. We were lucky enough to enroll some of our catalog very early in YouTube’s AudioSwap program, and we’ve seen tens of thousands in revenue from AudioSwap shared ad revenue. We receive performance royalties from ASCAP for the dozens of tracks we’ve licensed to TV shows like CSI. Once in awhile we license a track to a videogame or film. So even though sales are terrible, business is good. I don’t know if this is due to good business acumen or freakish good luck, but I suspect the latter.

For the most part, file sharing (voluntary and involuntary) and music streaming have destroyed music sales revenue.

Open Source and Capitalism are Incompatible Systems

Pretty much.

According to wikipedia, open source is a philosophy or pragmatic methodology that promotes free redistribution and access to an end product’s design and implementation details. It is usually used to describe the development process for large collaborative software projects, like Linux. More recently, the use of term has broadened to include any project where the methods and means of production are publicly shared. The Open Source Ecology project, which provides blueprints and detailed instructions for building heavy-duty farm and construction equipment from commonly available, inexpensive parts, is a great example.

So, a few bullet points to describe open-source in plain language:

  • the means of production, both material (stuff) and intellectual (techniques or methods) are free/cheap/easily obtainable
  • distribution is wide and decentralized (peer-to-peer or multi-node, not controlled by a single party)
  • the end-product is often free, or radically less expensive than proprietary options

The music industry still consists of proprietary players (including my company, Loöq Records), but music culture has been open-sourced, and this spirit now pervades the more enlightened aspects of the music industry. Music is radically less expensive to produce (a laptop with good software in capable hands can now compete, in terms of sound quality, with a multi-million dollar studio). For most musicians and producers (and many labels), getting their music heard and appreciated is more important than making money. To this end, artists are willing to share streams or files directly with their peers and fans. Many artists are also willing to share “remix parts” (the source sounds that make up a recording).

Does this reduce the amount of money exchanged? Yes, drastically. While open-source culture is great for the consumer, and even good for the artist in some ways, it’s terrible for the business of selling music.

Capitalism is based on scarcity. In order for the principles of supply and demand and “self-regulating” markets to function as expected, production and distribution channels need to be privately owned and tightly controlled.

Open-source destroys scarcity. When the means of production are free or very cheap, when distribution is free, and when producers prioritize values other than profit (things like social value, or status/bragging rights), then prices move quickly towards zero.

This is great for users. It’s terrible for capitalism.

Open Source Will Affect Everything

Open-source only applies to sectors where content can be digitally replicated and shared over the internet, right?

Wrong, it applies to everything.

When I shared this idea with a friend, he said “What about gasoline? Obviously open-source production and distribution methods don’t apply to extracting, refining, and distributing gasoline.”

True enough, but open-source can easily be applied to energy production. For example, here’s a video that demonstrates how to make your own solar panels. For now, this kind of thing only appeals to hardcore DIY nerds, off-grid survivalist types, and the like.

But imagine a scenario like this. Your neighbor knocks on your door.

“Hey J.D., do you want to join the local neighborhood energy co-op? We already have enough panels (made from an open-source design), so all you have to do is pay a $200 connect fee. At that point your electric bill will drop to about half of what it is now, and if you later decide to add some panels to your property the co-op might start paying you.”

It’s already happening. Both small and large-scale energy cooperatives already exist.

A single high-quality open-source product or service can invade and dominate a sector, like kudzu or Asian carp. It has a combination of traits that is lethal to its native, proprietary competitors. Consider:

  • radically less expensive to buy or implement, often free
  • ubiquitous availability
  • free to use in any way the user wishes
  • free to modify and customize
  • well-tested in the field
  • a community of active developers eager to respond to feedback and improve the product

Eventually, 100% of the global economy will feel the impact of open-source. I think it will play out something like this:

2000: Easy to download free music, many free software options for tech nerds/programmers, philosophies of both Open Source and Free Software movements are well-developed, Creative Commons founded in 2001

2010: Free music becomes industry norm, blogs share content freely, many creative works (music, photographs, books) published under Creative Commons, big chunk of entertainment is user-generated, high-quality free and/or open-source options for many types of software (OpenOffice.org, Firefox, Twitter, etc.), dozens of non-profit/non-proprietary energy co-ops, KhanAcademy.org provides over 2,500 free educational videos and helps tutor millions of kids, unlimited amateur/user-generated free porn

2020: High quality open-source and/or free options will exist for every type of software (open-source equivalents of Photoshop, Cubase, Logic, CAD, Facebook, search, mapping, etc.). Open Source Ecology will succeed in publishing production kits for at least 50 industrial machines, including a 3D scanner, 3D printer, wind turbine, bioplastic extruder, laser cutter, cement mixer, tractor, hay baler, induction furnace, robot arm, etc. Food production will become less centralized, with large numbers of small farmers and urban farmers sharing open-source agriculture techniques, and using non-proprietary seed stock.

2030: Consumer electronics will feel the hit as 3D printers allow consumers to print out their own circuit boards (pulling from a database of open-source blueprints) and make their own electronic stuff.

2040: Open-source AI’s will be available to do complex design, analytical, programming, managerial, organizational, research, and other intellectual work.

2050: Star Trek replicator technology. “Earl Grey, hot.”

Economic Effects (Massive Disruption)

The spread of open-source options doesn’t mean the end of economic activity. I suspect people will always be willing to pay for a sparkling brand, or the very highest quality, or things made carefully by hand.

But many industries are going to experience severe and rapid revenue shrinkage, and they may not see it coming.

To some extent, the internet, digital replication, and plummeting costs of production just shuffle revenue. Apple Computer steals revenue from the major labels. Google steals advertising revenue from newspapers and television networks. People pay AT&T and Comcast for bandwidth instead of paying for music and movies.

But it’s more than a shuffle. Revenue is actually going away. More and more stuff is becoming free, and the trend is just getting stronger.

So is that a good thing or a bad thing? I think it depends on where you live, and what your skills are.

Open Source Will Disrupt Your Life

Open-source culture creates wealth (less expensive, often higher quality goods and services for consumers), but it also destroys jobs. College kids can download all the music they want for free and thumb their noses at greedy record executives, but the record industry isn’t hiring those college graduates anymore.

Apple, Google, and Facebook employ half of Silicon Valley, but what’s to prevent users adopting an open-source version of social networking (one with no advertising, where you fully control your own data), or using BandCamp instead of iTunes? These things can happen quickly. Friendster, anyone?

If your job isn’t yet threatened by open-source methodology, consider what will happen when home 3D printing becomes a reality (of functioning devices, not just plastic models). Consider an open-source version of Siri, version 10, an AI that can not only program your appointments, but can write software, compose music, make money management decisions, supervise a team of robot farmers, etc. Will your job be safe then?

Do you sell widgets? Watch out for this guy (IndyMaker's 3D printer).

Increase Civic Wealth, or Else

If I lived in a country that valued civic wealth, one that offered universal health care, free public education (including early childhood and four-year college), a great public transportation system, solid energy infrastructure, and other civic perks, I’d be saying “bring it on!”

Open source/free may disrupt revenue streams, but it provides an enormous boon to the average citizen. High-quality products and services are suddenly much less expensive, easier to use and modify, etc.

The problem is, the open-source/free movement tends to concentrate revenue streams, not spread them out. There is less need for labor, and less revenue to pay employees. Business owners do fine if they run lean, but there are fewer jobs. The rich get richer and the poor get poorer.

Maybe the open source/free movement is also a solution to this problem (you might not need a job if most stuff is free), but I suspect that the economic disruptions caused by open source/free, and recent technological innovation in general, will lead to increasing income equality, social unrest, class warfare, and possibly even fascism, unless balanced by more progressive taxation policies and increased civic wealth (social democracy, or something better).

In the long run, we need to remodel our economy so that we are providing for each other instead of exploiting each other.

What Should You Do About It?

So, I’ve been riffing here. Some of you might think I’ve used the term “open source” too loosely, too interchangeably with “free software” or “peer-to-peer” or even “digital economy.” Maybe I have, but I hope my main points have come through:

  • the means of production and distribution of practically everything are becoming more and more open and accessible
  • people are creating and sharing non-proprietary solutions, designs, and works that are often of equal or greater quality than the proprietary options
  • these trends will disrupt every sector of the global economy by shattering scarcity and centralized monopolistic control
  • these disruptions will result in many benefits for the average person, but they may also destroy your job

On the last point especially, what can you do about it?

One final note … SOPA (Stop Online Piracy Act) can be seen as an attempt to slow down some of the trends I discussed in this post, but it is in fact a step towards fascism. On a social level, the correct response towards the open-source/peer-to-peer/free trend is not censorship and centralized control, but rather increasing civic/public wealth.

56 responses to “Watching Open Source Destroy Capitalism

  1. Great post. One aspect that I feel is is slightly inaccurate though is that corporatism and not capitalism is being destroyed. Small businesses have benefited from FOSS much more than it has destroyed them. Large corporations that used to profit from distribution networks that are now irrelevant because of FOSS are being destroyed.

  2. Thanks for your comment Rich. Corporatism is probably more threatened by open source culture than capitalism, but when the means of production and distribution become more accessible to everyone, and when artificial modes of preserving scarcity break down, then the fundamentals of capitalism may be threatened.

    I keep thinking of the Star Trek episode where the 20th century investor wakes up after being cryogenically stored for a few centuries, and wants to “check on his investments.” The crew has to gently inform him that money no longer exists, and that if you want something you just ask the replicator to make it for you.

  3. “you can master the odd, unnatural, rarely taught skills needed to thrive in modernity”

    I am probably the leading teacher of poetry to children in the world. Poetry Inside Out, now to be a part of the culture in your daughter’s, my granddaughter’s, soon to be transformed by the arts, neighborhood school, with its transformative basis in translation, is the most cutting-edge software (wetware, but we’re putting the poems on the web) for teaching poetry to children.

    Teaching poetry to children, in turn, is the most sophisticated system for radically developing the power of language. “I gave your poem swag,” Ibrahim said to Emma.

    None of my job descriptions (except, for a few years, classroom teacher) ever existed before I made them happen. With that and $0.75, at my age, I can ride the Muni.

  4. Yes, scaleable industry (manufacturing of widgets, printing/distributing music CDs, that kind of thing) will be much tougher, but non-scaleable services will still be around. In this scenario, one outcome is that nobody gets rich, but talented folks can make a good living with more autonomy.
    In the case of music in particular: music is normally a social, interactive medium, and recordings turn it into a solitary passive pastime. Recordings are to live music as masturbation is to real relationships. So if the death of that particular industry creates a situation where the only way musicians can make a living is through performance (you know, the way they did it for the last 10,000 years or so), I’m all for it.

    • I was about to be a little offended by your comment (since I *only* make recorded music and never play live), but then I remembered that I don’t think there’s anything wrong with masturbation.

      More seriously, you raise an interesting point regarding scalability. You’re probably correct — manufacturing industries are more vulnerable to open source methodology than, say, artisanal crafts. However, if an application can sufficiently mimic what we consider to be an exclusively human behavior, there’s no reason that application can’t be replicated. What if specialized open-source software working with a robotic arm ends up making unique pieces of artisanal pottery that people consider to be beautiful? The software and the robotic arm can be replicated, and suddenly a non-scalable industry (artisanal pottery) is threatened.

  5. Why not think about an open source society?
    Analysis available at: http://yannickrumpala.wordpress.com/2011/11/03/mapping_responsibilities/

  6. Hi there,
    copyright is the basis of copyleft and the
    basis of free software/open source. The whole thing is built upon the idea of ownership and free will. It is your choice and right to keep your work, and it is also your choice to share it.

    Capitalism as defined in the wikipedia “There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange and wage labor.” http://en.wikipedia.org/wiki/Capitalism

    All of these things apply to open source. There is a large amount of accumulation of copyrighted materials going on with contributor agreements and copyright assignments.

    I think that what you are describing is not the end of capital or capitalism, but the beginning of a new phase of digitalisation.

    mike

    • Thanks for your comment Mike. Systems of rights and permissions (intellectual property) will persist (at least I hope so). Open-source culture will push more people towards “copyleft” as you say (voluntary sharing).

      But can capitalism survive the end of scarcity? We’re not just entering a new phase of digitalisation, we’re entering a new phase of replication. Many so called “commodities,” like diamonds, can now be replicated. Scarcity in the diamond markets is completely artificial. Common objects will soon be “printable” (after being 3D scanned and entered into a database). Even the human brain is being reverse-engineered. In our own lifetime we may see replication of the human mind. A genius scientist or artist, why not make a thousand copies of that brilliant mind?

      I understand why it’s so hard to imagine the end of capitalism. We work so hard on accumulating and protecting our money and possessions. It’s difficult to imagine a reality where all that work might not be necessary, and we’ll be able to devote our efforts to more imaginative pursuits.

      • You are just looking at the expanding side, but not the contracting. for every ying you have an yang. game theory states that as soon as you have some totally “good” system it will only take one apple to spoil the bunch. You can imagine people replicating weapons etc, viruses and other factors that would then use these great positive things to create artificial scarcity. just read some of william gibsons cyberpunk for some ideas. The other thing would be, look at computer programming, which you know has the problem of garbage collection, why is it that you can create any object, but you still have the problem of raw resources, you have the problem of scarcity of space. of planets to colonize etc., of time. I think that nature has a balance, you can only tip it for a short period, and it wil swing back.

        • I think that I am also considering the “contracting” side, as you say, as I predict “increasing income equality, social unrest, class warfare, and possibly even fascism” as a possible consequence of open source/peer-to-peer culture, if not balanced by increased civic/public wealth.

          And I agree that the Gibsonian dystopias are possible, and that the future will bring a whole slew of novel problems. But that doesn’t mean capitalism is eternal.

  7. Pingback: Economie 2.0 by stanjourdan - Pearltrees

  8. I’ve long maintained that the price received by producers, and the price paid by consumers are too far apart. The difference goes into the pockets of the middlemen, That’s probably where the jobs are most vulnerable. Middlemen have contributed a lot to business efficiencies. In agriculture this has included the more efficient distribution of pathogens over a wide geographical area.

    Technology has put us in the middle of a major paradigm shift (a term that I prefer not to use too freely). It has made mass communication bidirectional. Major paradigm shifts don’t come without casualties among those who are too deeply attached to their old ways.

    As valuable as your suggestions for what people can do, we cannot escape the simple fact that people are driven (?!) primarily by inertia. They are deeply attached to their old mistakes, and are determined to keep making them even if it kills them. All their lives they have been taught the ethic of being productive members of society. Just like loyal North Koreans, they don’t know anything else.

    Innovation requires an ability to think critically, but that can undermine authority, notably that of the teacher. If the amount of time spent at a job falls below a certain level it generates more free time. Using that free time for a second paid job needs to be discouraged as harmful to the labour environment. Education needs to begin teaching people what to do with leisure time. The risk is that that will generate more leisure time.

  9. Thank you for an insightful post. While “revenue” will certainly decrease with the spread of open source, profits will increase – “profits” in the etymological sense of “to move forward, to progress.”

    Capitalism will not be destroyed, it will evolve. Capitalism is an evolutionary system, not a static structure, so it can adapt to changing conditions. The transition will no doubt be disruptive (especially to those in positions of power) but it will likely be positive. In the future we will all be artists and our efforts will be focused on helping one another live more joyful lives – the higher levels of Maslow’s hierarchy of needs. (That’s my hope anyway.)

    I’m in the final stages of writing a book entitled Conspiracy of Dreamers: Capitalism at the Service of Humanity that explores how we can use technology to push capitalism to evolve. My (recently started) blog is about the same subject. Would love to get your thoughts.

    Namaste

  10. I agree with most of your article, the only thing that is unclear to me is how these trends leads greater wealth inequality and/or fascism. This point seems poorly supported by the rest of the evidence and conjectures you provide. All the trends you indicate seem to both increase the amount of available and redistribute wealth. Wealth, not being defined by money, but by having one’s needs & wants provided for.

    • Thanks for your comment Zaq, and I agree that I didn’t explain that point very well.

      I think there is a possibility (not inevitability) of a decreased need for wage labor because of open source and peer-to-peer innovations. This is more-or-less what we see happening already with technological innovation in general. Replication and free distribution of highly efficient solutions enables owners to get by with fewer employees.

      If a society values civic wealth (healthcare, public education, top-notch infrastructure, social safety net, etc.) then maybe this isn’t such a big deal. Maybe in that case the increased wealth and efficiencies of open source and peer-to-peer benefit the worker so much that reduced employment isn’t problematic. It might even be desirable.

      But in the U.S., we don’t value civic wealth (at least not compared to Europe or Japan or Australia or Canada or many Latin American countries). So reduced employment could lead to greater wealth inequality.

      Why does greater wealth inequality put us at risk for fascism? I try to explain that idea in this post:

      http://jdmoyer.com/2011/10/19/to-the-1-how-to-keep-your-head-on-your-shoulders/

  11. Pingback: Bonnes lectures de la semaine #17 | Tête de Quenelle !

  12. I don’t think capitalism is being threatened by open source. If it did we would see it being demonized a lot more. The term itself is an attempt to make the much more radical Free Software, as championed by Rms, more accepted by businesses and consumers, and in some opinions, more watered down. Capitalism, or the crony capitalist electable totalitarian government/business elite merger we have in many countries today, is eating itself. It doesn’t need protest movements or development methodologies to destroy itself, because it is based on growth, and on convincing everyone of that growth. We see a csa or coop replacing a closed supermarket, or workers taking over an “unprofitable” factory and might think open source or p2pness is destroying it, but I see it as just people stepping in out of necessity, using their knowledge and abilities to plug the gaps left by the dying culture of unlimited growth (a very teenage mindset), with something more mature, fair and durable.

    • Interesting comment Ale. So you see capitalism as destroying itself, because of hard limits to growth, and community owned/managed models stepping in as a replacement.

      There may be some truth to that. What interests me is the radically disruptive effects of new technological/cultural systems. Mass production was a massively disruptive/destructive tech, many artisanal/crafts-based industries were destroyed. Local providers were also negatively effected as production became more centralized.

      Will free/cheap rights-enabled replication also have destructive effects, and force us to reevaluate our economic systems and values? I say yes, because of the threat to scarcity. But I agree with you in that hard limits to growth are also problematic for capitalism (which I discuss in this post):

      http://jdmoyer.com/2011/03/25/how-it-might-go-down/

  13. Pingback: IT / Tech | Pearltrees

  14. Pingback: P2P Foundation » Blog Archive » Discussing the P2P-driven Crisis of Value (2): Open Source Abundance Destroys the Scarcity Basis of Capitalism

  15. Neal Gorenflo and Michel Bauwens interviewed me on this topic on shareable.net — they came up with some great questions.

    http://shareable.net/blog/disruptive-distribution-an-interview-with-jd-moyer

  16. Great article…it’s late and that’s about all I can think to say, but wanted to acknowledge it anyway :-)

  17. “you might not need a job if most stuff is free”. Great. Would food be free as well? The problem is in the transition from the old to a new system, which is where revolutions often fail.

    • Neal Stephenson describes a fascinating dystopia where food is free (via replicators … food is “printable”) in the sci-fi book Diamond Age, but I get your point. You can’t remove scarcity from any system entirely, and therein lies the rub.

      I see peer-to-peer/open-source/frictionless replication/decentralized production as more of an inevitable technological transformation (one that is already in progress) more than a revolution. Like any technological transformation (such as mass production/the Industrial Revolution) we’ll see some sectors being destroyed, some new ones created, and an initial concentration of wealth unless we take countermeasures (investing in the civic/public side of society). I’ve called this process “cultural clawbacks” in a previous post: http://jdmoyer.com/2011/10/26/cultural-clawbacks/

  18. Paul of Alexandria

    Open Source doesn’t destroy capitalism, it just makes it more interesting. People don’t make money selling Linux, per se, but Red Hat makes an awful lot of money selling support and documentation. Likewise for the solar-energy example cited. Sure, you can buy your own panels – but how many people want to install and maintain them themselves? A good number, but not 100%. Some people will always have more technical ability in a given area than others, and the others will usually be willing to pay for their help. I can farm my own land, but it’s easier for me to do engineering work and pay the farmers.

    Re the music industry in particular, it has exactly the same problems as the text publishing industry. The question, then, is: what kind of expertise can you offer that people will pay for? I listen to Mark Gunn’s Irish and Celtic music podcast (http://www.celticmusicpodcast.com/). He doesn’t pay the musicians for their songs, they volunteer them. Nor does he get paid himself. Rather, Mark earns money from donations, from running his “Celtic Escape” vacations that he advertises on the program, and from selling compilations of favorite music. The listeners are going to him because he is a trusted expert (editor) and can be trusted to winnow through the 90% of the market that is dreck and give them a good selection of tunes to choose from. The musicians allow him to post their music free of charge in order to attract listeners to their concerts and sell CD’s.

    Several SF writers have pondered this problem, and noted that the most probable moneymaker in the future will be that of editor. For any field of literature or music, or any art for that matter, 90% of the material produced is not worth experiencing (RAH, I believe). A good editor is well worth paying for.

    • I agree, mostly, but why can’t editing be delegated to a clever AI (which can then be replicated for free)?

      I could be wrong, but I don’t think there’s any mental functionality that can’t eventually be reverse-engineered and then performed by sufficiently complex machines.

      In the long-run, I think we’ll have the choice of reorganizing our economy (with more of a civic focus) or collapsing from wealth inequity (total class warfare). If products and services (including “mind work”) keep getting cheaper to make/replicate/distribute then there just won’t be enough “worth paying for” under the capitalist model to keep us all employed.

      Some software engineers in the United States are feeling the pinch of having to compete with engineers from India, who are willing and able to work for much less. That’s nothing compared to having your job outsourced to an algorithm or AI.

      Including, eventually, the person who writes the algorithm or creates the AI …

  19. So, here’s where your logic went awry.

    “So, a few bullet points to describe open-source in plain language:

    1. the means of production, both material (stuff) and intellectual (techniques or methods) are free/cheap/easily obtainable”

    When’s the last time you bought a Gucci for 5 bucks at a thrift store? You did know that Fashion is open source right? Cuz, boy let me tell you, those record executives are all down at the #occupy rallies complaining about how open-source music killed their jobs.

    “2. distribution is wide and decentralized (peer-to-peer or multi-node, not controlled by a single party)”

    Most software products, even open-source ones, are distributed from a central source. Google: mysql download, firefox download, WordPress download, etc. etc. All major, successful free software depends on a central source.

    3. the end-product is often free, or radically less expensive than proprietary options

    The last time I bought a pair of shoes, they weren’t free. Hell they weren’t even cheap… unless you’re super rich. You could argue that it’s just software that’s cheap, but then you’re not making a post about software… and if you were to argue that, I’d tell you to go buy 20 copies of RedHat sometime.

    The rest of the post that flows from your 3 premise is great though! The irony? My ability to post this relies on so many thousands of open-source ideas and software that I can’t even begin to count them.

  20. Pingback: Disruptive Distribution – a Shareable.net Interview with Michel Bauwens and Neal Gorenflo | The Blog of J.D. Moyer

  21. i’m with Ian Burgess above, this is a great provocative post. many thanks to both the author and those who have proffered comments.

    this offering brings to mind an interview i read recently with Mosaic/Netscape’s Marc Andreessen whose core thesis is that “software is eating everything”, i.e. the explosion of services available via the internet and apps phenomena is collapsing whole industries before our eyes. one example i recall was the way in which LinkedIn et al are supplanting the $400 billion p.a. global recruitment industry.

    so while this mass democratisation of everything is likely to sweep away much before it i agree with the comments above about the advent of an increased need for the ‘editing’ function. good advice on how to use and interpret and take decisions within this new digital storm will increase. then again it could be argued that Amazon.com ratings and comments and FaceBook ‘likes’ and product comparison sites are filling this space rapidly as we speak …

  22. Capital’s Globe Wide Risks
    Under the darkening shadow of capital’s crisis hundreds of world capital bosses are meeting in Davos, a snow covered Swiss mountain village. On the eve of this annual meeting of the World Economic Forum (WEF), capital’s salvation-searching convention, the Global Risk 2012 report “reveals a constellation of fiscal, demographic and societal risks signalling a dystopian future”, George Soros apprehends possibilities of riots and violence in the center of the center of the world capitalist system, and forecasters apprehend a lost decade for the UK . While about 1.1 billion people worldwide were either unemployed or living in poverty, as the ILO’s latest Global Employment Trends report claims, capitalism is being questioned by its proponents. Prof Klaus Schwab, the founder of the WEF, said: “Capitalism in its current form no longer fits the world around us.” ( “ Davos 2012: Has capitalism got a future?”, BBC , Jan. 24, 2012 ) All these developments and pronouncements unerringly show capital’s inherent incapacity in resolving its own crises that are disproportionate to its capacity.
    The Global Risk 2012, insight report ( GR ) identified five risks: economic, environmental, geopolitical, societal and technological. Based on a survey of corporate leaders the most frequently chosen Centres of Gravity, the risks of greatest systemic importance, in today’s world are: chronic fiscal imbalances, GHG emissions, global governance failure, unsustainable population growth, and critical systems failure.
    “Analysis of the 2012 Global Risk Map”, the GR said, “reveals four risks as playing significant roles in connecting the Centres of Gravity to each other. These four Critical Connectors […] are: severe income disparity; major systemic financial failure; unforeseen negative consequences of regulation; extreme volatility in energy and agriculture prices.” “The signs already exist that the world is becoming more fragmented, inconsistent and mistrustful; the question is the extent to which these developments could lead to a global dystopia”, said the report.
    Global governance failure, the GR mentioned, is the most interconnected of the 50 global risks having a direct connection with 75% of the risks covered in the report. The GR said: “[D]ominant issues of concern emerged from the Arab Spring, the ‘Occupy’ movements worldwide and recent similar incidents of civil discontent: the growing frustration among citizens with the political and economic establishment [….] In developed economies, such as those of Western Europe, North America and Japan, the social contract that has in recent decades been taken for granted is in danger of being destroyed.”
    Almost-similarly, the Edelman Trust Barometer , a global survey, suggests there has been a sharp decline in public trust, not only in business, but in governments around the world also.
    Experts, the GR said, anticipate that high unemployment rates will increasingly co-exist with employers’ unmet demands for skilled labor.
    There are, the GR said, important factors of concern with unknown consequences that are emerging. It admits combination of chronic labor market imbalances, chronic fiscal imbalances and severe income disparity amplified by extreme demographic pressures that could lead to “the emergence of a new type of critical fragile states – formerly wealthy countries that descend into a spiral of decay as they become increasingly unable to meet their social and fiscal obligations.”
    Young and old of the world, the report said, could face an income gap and a skills gap so wide that threaten social and political stability. “In the absence of viable alternatives, this could precipitate a downward spiral of the global economy […]”, said the report.
    Significant questions for stakeholders were raised by the GR : (1) How can countries collaborate more effectively to correct chronic labor imbalances? (2) What will “social contracts” be like in 2022? (3) What steps can be taken to reduce income disparity? (4) How can fostering entrepreneurship prevent the seeds of dystopia from taking root? (5) How can leaders break the pattern of crises? (6) How can appropriate regulations be developed so that firms will undertake effective safeguards? (7) How can businesses and governments prevent a rapid breakdown in trust following the emergence of a new widespread risk? (8) How can business, government and civil society work together to improve resilience against unforeseen risks?
    At the same time another warning came from the IMF: The world’s economy is “deeply into the danger zone” because of risks from the euro zone. The escalating euro zone debt crisis could derail the global economic recovery, the international lending agency said in its latest World Economic Outlook report. The IMF hacked its 2012 global growth forecast warning the outlook had devolved in most regions. With the same tone, the IMF chief warned: The global economy could fall into an economic spiral reminiscent of the 1930s unless action was taken on the euro zone crisis. She has called on Europe to construct a wall against financial contagion. Echoing the warning, the IMF chief economist said: “The world could be plunged into another recession.”
    The euro zone is set for a “mild recession” in 2012, the IMF predicts. Italy and Spain could be the first cases. Growth estimates have been reduced for the main euro zone countries including Germany , the euro zone powerhouse, and France . Central and eastern Europe and Asia could also be hit by the euro zone crisis. A sharp slowdown in the pace of growth in emerging and developing countries has been predicted by the IMF. It reduced Asia ‘s growth outlook for 2012.
    The IMF cut its projection for Japan , and said: the US and other advanced economies would likely not escape unharmed if Europe ‘s crisis widened further. Moreover, the advanced economies “have homegrown challenges [...] including overcoming political obstacles”, the lending agency said. The EU economic affairs commissioner is also apprehending a “moderate recession” across Europe in the first half of this year.
    News from the UK is not good. There are increasing concerns that the credit crunch will ultimately result in a “Lost Decade” for the UK . Many fear the UK is already experiencing the early stages of a lost decade. (“Could Britain Be Facing A ‘Lost Decade’?”, Sky News , Jan. 22, 2012 )
    The UK government debt, as BBC reported, has risen to a record £1 trillion. The current net debt total is 64.2% of the UK GDP, and number of its unemployed citizens rose to 2.69 million. The unemployment rate rose to 8.4%, the highest since January 1996. The number of persons claiming Jobseeker’s Allowance in December rose by 1,200 to 1.6 million. The number of young persons looking for work reached a record height: 1.043m. Citing the Office for National Statistics BBC informed these figures on Jan. 18, 2012 .
    The world unemployment reality is also discouraging. The ILO report said: The number of “discouraged workers”, persons stopped looking for work because they think they are unlikely to find a job, is 29 million. With this number of discouraged workers, the global unemployment rate jumps to 6.9% from 6%, and the number reaches to about 225 million persons worldwide, the report said. “Judging by the present course, there is little hope for a substantial improvement in their near-term employment prospects”, said the ILO’s Employment Trends report. The outlook for the world labor market has worsened from last year, the ILO said.
    This capitalist reality does not make George Soros, one of the most cunning investors in the world, hopeful. According to two US media outlets including Newsweek , Soros perceives: “The euro must survive because the alternative — a breakup — would cause a meltdown that Europe , the world, can’t afford.” “At times like these, survival is the most important thing,” he said. Soros doesn’t just mean it’s time to protect assets. Rather, he signals: it’s time to stave off disaster. The world, Soros feels, faces one of the most dangerous periods of modern history — a period of “evil.” A strange pronouncement indeed; as in Reaganspeak, “evil empire”, the Soviet Union , is no more on the world map. It is capitalism only that now dominates the globe. Soros has more perceptions: Europe is confronting a descent into chaos and conflict. In the US , he apprehends riots leading to a brutal clampdown and dramatic curtailment of civil liberties. The global economic system could even collapse altogether as Soros predicts. “The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek . “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.” (“George Soros on the Coming U.S. Class War”, Jan. 23, 2012 )
    The almost self-explanatory facts cited above and conveyed by mainstream media tell some truths, bitter for it: (1) crises-ridden condition of the world capitalism; (2) the way the system has generated its crises, one after another, one gravitating the other, one influencing another; (3) width, globe-wide, and magnitude of the crises; (4) the system’s worshippers’ confused intellectual condition; (5) its extent of power that cannot control itself; (6) its need for a huge reserve army of labor to keep labor press down to dust, to bargain favorably, and at the same time, it cannot escape the possibility of facing force of labor pent up in reserve labor; (7) its ulterior motive: preparing ground for an onslaught on labor. While capital continues waging its class war against the working people it raises hue and cry as if it is being targeted. The only salvation path capital can find is: create havoc in social reality, in mass-mindset, burden down masses with the pressure of hardship and hunger, name of which is “austerity”. Not only is the system’s economy facing danger. Its governing system, capital’s dictatorship, is losing credibility and coming under question. The mainstream admits this, one of the primary condition for a retreat. A significant admission, indeed!

  23. Great article.
    Now that Microsoft and Cisco are fighting over Skype, I guess that is the next target for Open Source: VOIP services or maybe we should call it VOI4P (VOI 4 the People! :)
    Just as the planet readjust to change, so must we learn to and re-integrate ourselves with its ecosphere, leaving the Teraparasites to starve, in an Open Source, Post Peak Oil where the Local Pound is worth more than gold!

  24. A relevant essay — Paul Graham discusses how the definition of property changes slowly over time. http://www.paulgraham.com/property.html

  25. Pingback: What’s Holding Us Back, As a Species? (Part I – Fight for the Future) | The Blog of J.D. Moyer

  26. Pingback: What’s Holding Us Back as a Species? (Part II – Unpacking Assumptions) | The Blog of J.D. Moyer

  27. Pingback: Advice For Broke Young People | The Blog of J.D. Moyer

  28. Pingback: The Natural End of Capitalism | The Blog of J.D. Moyer

  29. Like you I was concerned about the negative impact of open source on the capitalist economy until I read this essay/article about open source economics: http://people.mech.kuleuven.be/~bruyninc/etos/economy-oss.html

    I now feel that perhaps life is bad for those who try to make money from the old ways – or for those who expected to employed by those people – but that open source is not antithetical to capitalism.

    In any case, open source is also about Microsoft’s relationship with OEMs meaning my only choice for an operating system when I buy a PC is Windows, unless I seek out a specialist supplier. Is that capitalism?

    Ubuntu by default collects information on my usage, but is otherwise free-of-charge. This places it on the same level as capitalistic products like Google Chrome and Facebook. To my mind, that is exactly where an operating system should be in 2012. And no, I use Windows for desktop computing.

    Now, do we have a problem in terms of wealth creation and job creation? We certainly do, especially in the West where we have mostly benefited from the old ways and have generally been able to offer a job with a living wage to everyone who wanted one. We may well need to rethink many things we have taken for granted.

    However, capitalism like water finds its own level and just because our own bottom line might be diminishing doesn’t mean the system isn’t working according to its conception. Indeed, George Orwell even understood that the socialist parties of the West were hypocritical in the sense that wealth distribution (globally) was the last thing its Western working class electorate really wanted. The Western working class may have been poor in comparison to the Western middle class but its lifestyle was in large part sustained by the desperate – and much more profound – poverty of today’s “emerging (emerged?) markets”. Job creation has shifted to those countries but then that’s were population growth is also greatest. Therefore, isn’t that morally how things should be? Things might be bad for us right now but for a poor(ish) but intelligent woman in Mumbai who can now access the world economy and intellectual capital thanks to cheap computing things have got significantly better.

    Capitalism has always had winners and losers. Indeed it requires there to be some losers in order to make it work and it has always hurt to be on the losing side. Even in the “good old days”.

  30. Pingback: Insurgent Anarchism: An Idea Whose Time Has Come – Part II | WHISTLE newsroom

  31. Pingback: Insurgent Anarchism: the power of networked resistance | Reflections on a Revolution ROAR

  32. Pingback: Insurgent Anarchism: the new networked resistance | Reflections on a Revolution ROAR

  33. Thanks for this article. I have never been a fan of much of the philosophy of open source software because IMO it devalues the very specialized skill of software programming, and (no disrepect to laborers) makes it easier to make money putting up sheet rock than being an independent software developer.

    While I support the idea that if someone wants to give away the fruits of their mental labor, that is their choice, but the way things have gone, the same people who will spend $5 every day at Dunkin Donuts without a second thought are ready to storm Facebook’s offices with pitchforks and torches whenever they get the hoax email that says that Facebook is thinking of charging $5 / month for 24×7 global service.
    The idea that software ‘can’ be free has moved to software ‘must’ be free, which has (IMO) destroyed the incentives for smart people to create those replicators unless they are independently wealthy, living off someone else’s dime, or have lots of time on their hands.

    I also think it has created an environment where only a few large companies get to profit, while the 99% struggle, hoping that they might hit the lottery by selling the next stupid game for a dollar to millions of people.

    While capitalism also may only result in a small number of super-rich, this is not a problem unless you are trying to beat Bill and Larry’s balance sheets. IMO the old model was far better for more people, as it provided more opportunities for a greater number of producers to benefit by providing a good product at a fair price. It is a lot more realistic to support yourself and your family writing sofware when you can sell it for more than a freaking donut made by a high-schooler on their first job.

    I wonder how many potential replicator firmware creators will not even consider getting into software because they may want to become entrepreneurs rather than working stiffs or volunteers.

    I know for sure that I no longer tout software development as a way that smart and entrepreneurial young people could start businesses the way I did in the 90s. Today they have better financial opportunities setting up a lemonade stand.

    • Thanks for your comment Ken. I think basic software development skills are (or should be) just part of the basic “core competency” skill set these days, like literacy, arithmetic, social skills, and knowing one or more foreign languages. It’s not that knowing programming opens up financial opportunities — but these days not knowing programming on some level may close them off.

  34. Amazon patent for digital goods “lending” to “maintain scarcity” (DRM by any other name).
    http://www.geekwire.com/2013/amazon-wins-patent-reselling-lending-used-digital-goods/

  35. “How are we going to structure a society that needs radically less human labor?” http://thoughtinfection.wordpress.com/2013/03/03/the-jobs-are-never-coming-back/

  36. Capitalism is already dead. It’s a phenomenon similar to a chicken once it’s head has been removed. It’s still runnin’ wild for the time being but mark my words, capitalism is finished.

    In my early years I felt out of place, as if I had been born in the wrong time. The ancient past or distant future seemed more fitting. Now I’m beginning to appreciate the present, it’s an amazing time we’re experiencing. The future is now, we will bear witness to the first steps towards a new (futuristic?) society. That odd in between feeling is gone now that I can feel, almost see, something great just over the horizon.

    It was a good read, thanks Mr. Moyer.

    • Thanks K.C. I hope you are right about a brighter future. I think corporate consumer capitalism may die a long, slow, ugly death, but there are already green shoots that indicate promising new directions. What ends up replacing our current system may be some radical new model, or it may be an more modest evolution that retains the better elements of capitalism (competition to create better products and services, entrepreneurial freedom) while fully taking advantage of the wealth creation of open source and automation (free copies of stuff, free robot and computer labor) and sharing that wealth with all citizens in the form of public abundance (universal healthcare, unlimited free education, free transit, free energy, free staple foods, and so on).

      The decline of scarcity is wreaking economic havoc under our current system that punishes those people that don’t have jobs. But zooming out, is it such a bad thing to have less toil? Greater leisure was the utopian fantasy of sci-fi eras past, but those future imagineers didn’t think about wealth inequality. Wealth needs to be decoupled from toil. Is this the same as a welfare state? Only if you make wealth sharing “needs based” (and then you run into issues raised by Charles Murray re: a permanent underclass and negative incentives [look up Murray's Law]). But nobody complains about how roads, public parks, police departments, or fire departments morally corrupt citizens, making them lazy … these are all examples of non-needs-based public wealth … why not massively increase this sector? More than a “safety net,” we should shoot for a “wealth foundation” for every citizen.

      “Open-source” (in the broadest sense) creates massive real wealth, but it destroys scarcity and scarcity-based economic systems. The question we face is how to effectively share the wealth.

      Murray’s Law:
      http://en.wikipedia.org/wiki/Charles_Murray_%28author%29#Murray.27s_Law

  37. Pingback: Wikipedia Benefits the Median and Hurts A Few Elites | Medianism.Org

  38. I would include money itself, in the form of cryptocurrencies. This is already happening and is basically money using an open source system. Its going to have a huge effect on all sorts of things, in my opinion.

  39. as for capitalism, I think the game of monopoly is fairly correct, once everything is monopolized its game over, the only way to keep it going would be with a very progressive tax system of some sort

  40. A thoughtful article on this topic, predicting the growth of “new artisan” type jobs: http://opinionator.blogs.nytimes.com/2013/08/24/how-technology-wrecks-the-middle-class/

  41. I personally welcome the coming shift to open source methodologies because it combats the automatic inflation that capitalism can’t control effectively. We work more, but our money becomes worth less and less because people in the chain take but don’t give back. Open Source removes those who’s interests are only self-involved from the distribution chain because they remove themselves as they want the most profit for the least amount of work. Capitalism can keep the dead-weight parasites for all I’m concerned and the rest of the world will march on to the beat of the new drum. All I want is fair pay for fair work, and transparency throughout the entire process, and open source fills this need beautifully while capitalism makes excuses for why it continues to fail.

  42. Pingback: No War but Class War; Insurgent Anarchism: The Power of Networked Resistance; The next Revolution is it Anarchism? | Fahrenheit 451 Used Books

  43. Pingback: The End of The Capitalist Economy (Links) | Courtenays Random Thoughts

  44. Perhaps communism, socialism and capitalism are “apples on the same tree”–materialism and imperialism. Exchange between mankind is neither capitalism nor communism. Communism and capitalism are about putting control of otherwise freely available resources (land, food, etc) in the hands of a few at the expense of many. Making everything free doesn’t help people who aren’t getting free houses, free food, free clothing or free gasoline. Most open source software is poorly documented and poorly written, What open source software has done is help super-huge, international companies (like Microsoft and Oracle) easily canvas for source code and ideas from people who actually need the money to survive and then turn those ideas and source code into paid products. Yes you have reduced the development and procurement costs for major software companies. Do you not realize that major companies put people up to starting open source software sites without making connections known to the big company. Capitalism and communism are the same. Just like fraud by private companies and fraud by the state still amounts to fraud.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s